Gold Prices Flat for Week as Pause in Trade Tensions Puts Brakes on Monthly Surge

August 31, 2019 / / Article Link - Gold prices were little changed on Friday,after a modest boost from U.S. inflation data failed to revive a rally driven by last week's escalations of the U.S.-China trade war.

Gold futures for December delivery on the Comex division of the New York Mercantile Exchange, rose $1.15, or 0.1%, to $1,538.05 a troy ounce by 9:15 AM ET (13:15 GMT).

The precious metal pulled away from the flat line after the Fed’s preferred inflation indicator, the core PCE price index, rose less than expected in July.

Subdued inflation has been one of the key factors mentioned by the Federal Reserve as justification for a looser stance on monetary policy.

Markets continue to price in an additional 25 basis point cut at the next policy decision in September.

Lower interest rates tend to support gold by reducing the yield on bonds, which compete for the capital of risk-averse investors.

Gold was on track for a rise of nearly 7% for the month, due largely to the U.S. and China escalating their tariff war throughout August. However, it was noticeably flat for the last week as tit-for-tat retaliations dried up and the rhetoric from both sides became vaguer. Chinese officials said on Friday merely that negotiators on both sides were “maintaining effective communication.

Ole Hansen, head of commodity strategy at Saxo Bank, said the rally had paused not only because of trade developments, but also due to technical factors in the foreign exchange market, where the dollar hit a one-month high earlier Friday, and to investors seeking relative value in silver and platinum.

Silver futures, which were slow to follow gold higher earlier this year, have risen over 17% this month. They gained 1.0% to $18.512 a troy ounce by 9:17 AM ET (13:17 GMT).

Palladium futures traded up 3.8% to $1,527.80 an ounce, while sister metal platinum rose 2.0% to $938.00.

In base metals, copper advanced 0.1% to $2.581 a pound.